How to buy your first home: mortgage or cash?
Is it better to buy a house by paying it in cash or having a mortgage? What are the advantages of one over the other choice? All the answers to the questions.
Everyone knows how profitable it can be to invest in property sales quick, but since 2008 the most common fear is that of not being able to sell anymore.
Unfortunately, what happens more often is that you buy a property for your own personal taste, but without really knowing it. It is important to know about the options available in the market and then make the final decision for such a major investment.
You must know the opinion of those who live in the market, because they may know the needs of the future buyer better than you. It is the request that decides: we must adapt and give the market what it wants, as long as they pay you. This is why you should not miss the purchase.
Because the number 1 rule of any successful real estate operation is to focus on a good purchase.
If you go wrong that, you will have to put patches on your operation and run for cover.
But if your purchase is correct, then you can be sure that, following the right sales strategy, you will succeed in your operation. Because a correct operation actually takes very little, and does not care about market trends: you buy a house at a pre-established discount (you should spend in all less than 30% of the street price or quick sale price) and resell the property at a cheaper price than the market at that time.
And it is more than possible to find these opportunities: you need to know where to look. There are strategies and techniques to map the city and find those people who, for personal needs, need to get rid of their property even at bargain prices, or you can look for your opportunity at auction or with excerpt. The opportunities, in short, are there.
Once you have identified a property you are interested in, however, there are 4 fundamental steps for a successful property sales quick:
1. The feasibility study: It must be accurate, so that you already have the accounts in hand to understand if the operation can be feasible or not, really profitable, or not, with an in-depth document analysis and evaluation of the reference market.
2. The acquisition: Negotiation in order to buy the property at your price and all the relevant practices.
3. Operation management: including any internal work and home staging to increase the value of the property and market attractiveness.
4. Marketing / Sales: with the help of an agency that must be directed so that the property is sold in a short time and at YOUR price.
Only by following these steps in a linear and correct manner is it possible to sell house for cash quickly, which lasts a maximum of 2 months. Then to get to the deed they need at least another 2 (unless you pay in cash, which is unlikely).
If it takes longer, it means that something has gone wrong in these 4 phases, and it is necessary to identify what, in the shortest possible time, to adjust the shot.It is important that you choose your buyer, even the payment method, and that you always have control of your transaction. It must be all in your favour.
Buy your first home with a mortgage or cash?
Paying in cash avoids contracting a debt with a bank, but this choice can leave little liquidity available. Conversely, with the mortgage you pay a little at a time- so it is certainly a more sustainable solution for most families. On the other hand, however, the commitment to the bank can take a very long time: mortgages can last from 5 to 30 years, during which you will also have to pay interest expense.
Many today choose to buy part of the house in cash and partly with a mortgage, so as to be able to maintain a liquid availability to face notary fees, taxes and furniture, in addition to the daily and unforeseen expenses that can always happen.
First time home purchase in cash: advantages
The first condition to buy a house by paying in cash is obviously the economic availability: you need to have a lot of money aside or you must be able to count on a loan from a family member (parents or grandparents).
By being able to choose it, this solution is advantageous because it avoids having a debt with the bank for many years.
Furthermore, paying the house in cash has lower costs- compared to the mortgage- because you don’t have to pay interest to the bank and the fees and taxes to the notary and the State. So, in fact, the house costs less than buying with a mortgage.
Because you are selling a product that nobody has, at the best price.
First home purchase and severance pay
About facilitations concerning the purchase of the first house it is good to know that, according to the Italian law, you can ask the advance of the TFR to buy the first home for yourself or for your children. As regards, on the other hand, the severance indemnity paid in supplementary funds for the purchase of the first dwelling house, the advance can be requested up to 75% of the accrued position only if 8 years have elapsed since registration in the fund.
There is no universal answer to the question “Is it better to buy your first home with a mortgage or in cash?” As we have seen, every solution has its pros and cons. Everyone should choose according to their needs and risk appetite. If you are thinking of buying a home with a mortgage, you can calculate the quote to insure it.